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Putin's oil tsar emerged from shadows to wield vast power

Rosneft President and Chairman of the Managing Board Igor Sechin speaks during the IHS CERAWeek energy conference in Houston March 6, 2013.
Rosneft President and Chairman of the Managing Board Igor Sechin speaks during the IHS CERAWeek energy conference in Houston March 6, 2013.

By Vladimir Soldatkin

MOSCOW (Reuters) - When Vladimir Putin brought Igor Sechin out of the shadows and into the Kremlin 14 years ago, Russian newspapers said they had no photographs of him and alluded to his behind-the-scenes influence by calling him Darth Vadar.

A man with no energy industry background, Sechin has served for two years as boss of Rosneft , a state-controlled company that under Putin swallowed up Russian oil assets to become the biggest publicly listed oil producer in the world.

A close lieutenant of Putin's for more than two decades, Sechin is the most important figure among a list of Russians whose U.S. assets were frozen on Monday as part of sanctions intended to push Moscow to stop supporting a pro-Russian uprising in eastern Ukraine.

His biography has gaps - he was posted to Africa in the 1980s, officially as an interpreter for a Soviet trade body. But he is widely reported to have served, like Putin himself, as a spy during the dying days of the Soviet Union, which he has never denied.

That shared international cloak-and-dagger background has helped make him one of Putin's most trusted aides and arguably the second most powerful man in Russia, despite having no official role in government since 2012.

He played a central role in Putin's drive to reimpose the state's authority over Russia's most valuable asset, its energy industry, which had been carved up and sold off to oligarchs in rigged privatization auctions in the 1990s.

Sechin, 53, joined Putin in the Kremlin from the outset, quickly earning a reputation as a leader of the "siloviki" - a conservative faction of former members of the security services close to Putin who controlled the levers of power.

With reports growing in recent weeks that Sechin might be on a sanctions list, he has shrugged off the likely impact, saying last month they merely would unite people around Putin.

"As for the country's loyal elite, sanctions have always led to the consolidation and concentration of forces against pressure from outside," Prime news agency quoted him as saying.

The comment is a sign of Sechin's loyalty to Putin, the single asset that has made him most useful to the president.

"He is very faithful. He has his own notion of honor, which

is to stay loyal till the bitter end," said Yevgeny Muravich, who studied languages, including Portuguese, with Sechin at Leningrad State University, and worked with him in Mozambique.

COLD WAR, HOT FRONT

Sechin's languages were useful when posted to southern Africa in the 1980s, at a time when guerrilla wars in Portuguese-speaking Angola and Mozambique were two of the hot frontlines of the Cold War. He says he was serving in the military at the time.

Rosneft declined to comment on Sechin's past jobs. Repeated requests for an interview were left unanswered.

After the fall of the Soviet Union, Sechin, like Putin, returned home to a Russian Federation suddenly shorn of its empire. The two men worked together in the St Petersburg mayor's office in the 1990s where Putin began the rise that brought him to the Kremlin at the start of the new millennium.

When Putin took over as president from an ailing Boris Yeltsin, he brought Sechin to the Kremlin as deputy chief of staff, where he became known as a "grey cardinal" with power beyond his official title.

With most of the Russian oil industry then in the hands of oligarchs, Putin used Rosneft, a state-controlled firm that produced just 250,000 barrels of oil a day in 1998, to reassert the state's role. Putin named Sechin Rosneft chairman in 2004.

Mikhail Khodorkovsky, a former oligarch who fell out with Putin and was jailed for more than a decade, says it was Sechin who masterminded the breakup of his Yukos oil firm, mostly sold into state hands after Khodorkovsky's 2003 arrest.

After relentlessly extending its reach, Rosneft now produces 4.2 million barrels per day - 40 percent of Russia's output and nearly 5 percent of the world's. That is nearly double the output of Exxon Mobil, the biggest Western major.

When Putin took a break from the presidency and served as prime minister for a term from 2008-2012, Sechin served as deputy premier. When Putin returned to the Kremlin, he put Sechin in charge of Rosneft again, this time as CEO.

Under Sechin, Rosneft acquired BP's half share in a Russian joint venture last year in a huge deal that left Britain's largest company with a 20 percent stake in Rosneft.

TAKING AND GENERATING ORDERS

By concentrating so much of the Russian oil industry in one state-controlled firm under the supervision of a personally loyal lieutenant, Putin reversed the chaos of the Yeltsin era, when Russia's oil fields were divided among oligarchs.

Former employees at Rosneft say Sechin is a demanding boss.

"He rules with an iron fist, he keeps all figures in his head. He has a great memory and a fantastic ability to work long hours," one former employee said.

Sechin strictly follows Putin's instructions but also appears to influence the president. Industry sources say that in 2005 Sechin blocked plans that Putin had blessed for Rosneft to merge with Gazprom because he did not like the way control of the behemoth would be shared.

"He follows orders from above (Putin), but sometimes he generates these orders," said a top Russian executive who asked not to be named.

Putin and Sechin have also used Rosneft's giant portfolio of undeveloped assets to win international influence.

While serving as deputy prime minister, Sechin struck exploration deals with Exxon Mobil , Norway's Statoil and Italy's Eni . Those partnerships seek to develop Rosneft's vast offshore reserves and help it acquire know-how in extracting hard-to-recover oil.

Industry sources say Sechin cleared the way by convincing Putin to back a new tax regime that encourages firms to invest.

An industry insider told Reuters that Sechin's ultimate goal was to turn the company into a global major, similar to BP and Shell . Its purchase of Morgan Stanley's oil trading business is a part of that drive.

(Additional reporting by Katya Golubkova, Editing by Timothy Heritage and Peter Graff)

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